As a business plan, the conveyor-belt system works as long as it can attract a ready supply of students. Your fourth point, which strikes me as the most important, is more pedagogical than business IMO. I think that the problem here is the assessment, but the advantage to a business of basing it around a written test is that it can be done every year with a transient staff. However, it clearly has shortcomings- there's more to language and life than a multiple choice grammar test- interviewing students and spending some time getting to know what they're after is important and placing them in a level based on whether they got the present perfect question right or wrong is a very crude tool.
- For Teachers